American International Group Inc. posted profit that fell short of Wall Street estimates as costs swelled on contracts in which the insurer guarantees payments to accident victims.

Third-quarter net income of $462 million, or 42 cents a share, compares with a net loss of $231 million, or 18 cents, a year earlier, the New York-based company said Wednesday in a statement after U.S. trading closed. Operating income, which excludes some investing results, was $1 a share, missing the $1.20 estimate of 19 analysts surveyed by Bloomberg.

Chief Executive Officer Peter Hancock is seeking to rebound after posting three straight quarterly losses through this year’s first period. He’s been selling assets and cutting jobs to simplify AIG as part of a plan to return $25 billion to shareholders over two years and placate activist investors Carl Icahn and John Paulson, who won representation to AIG’s board this year.

The goal is to make AIG a “leaner and more focused insurer,” Hancock said in the statement, as he announced a $3 billion increase in the insurer’s stock buyback authorization. “Our portfolio management decisions, actions to run off the legacy portfolio and capital allocation all exemplify our guiding principle of building economic value.”

In January he created a legacy block of assets that AIG is seeking to wind down or exit. Those include so-called structured settlements like the ones that burned the company in the third quarter with a pretax expense of $622 million.

On those contracts, people who win legal settlements or court orders in disputes tied to workplace accidents or medical malpractice turn to AIG for guaranteed payments, rather than lump-sum awards. Costs rise for the insurer when interest rates are lower or the people live longer than expected.

AIG slipped 3.2 percent to $58.60 in extended trading at 4:58 p.m. in New York. The company dropped about 2 percent this year through Wednesday’s close.

Capital Losses

Third-quarter results also included more than $500 million in capital losses, largely tied to currency fluctuations such as the decline in the pound after U.K. voters chose to leave the European Union.

Book value rose to $85.02 a share at the end of September, from $83.08 three months earlier. Operating return on equity, climbed to 6.7 percent during the period from 3.5 percent in last year’s third quarter.

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